Comments (0)

Transcript of The Evolution of the Retail Industry

So, the economic opportunity/ size

of the market is afunction of the area under the bell curveSize of PopulationBreadth of PopulationSize of PopulationPopulationscan be represented by bell curvesBreadth of PopulationBiggerThe arc on the curve represents the distribution of values, interests, aspirations, or wantsIn a small town,the curve is smalland the opportunityis smallBut as the town grows,so does the economic opportunity!When the town grows large enough, Merchants begin to focus specific target marketsEach target market is a specific size that is shown as the area under the curveBigger towns, bigger markets and new/bigger opportunities to specializeWhen the town grows large enough, Merchants begin to focus specific target marketsEach target market is a specific size that is shown as the area under the curveThese new markets, are narrower than before, but are much bigger because there the population is largerAs Towns become cities,the opportunity grows.The opportunity in a city like New York is incredibly large, both in total available market as well as for very narrow niches which on their own, are large addressable markets.Each of these niches is a much larger opportunity than even small cities because of the size of the total marketNow consider the internet. 2500X larger than New York City.Now "niches" are bigger than entire cities!Market "Niche"Your relationship with your customer is an ongoing conversationSpecific, focused conversations about common values, interests and aspirations are exciting!Conversations across multiple niches are hard to engage because they devolve to the lowest common denominator of interest (e.g "how about this weather we're having?")Broad, general conversations are boring and short-livedConvos with CustomersGeography doesn't matterGeographic aggregation means adding stores to aggregate customersBut many geographic markets can't support a store unless it is broad enough in focusBroad focus is a boring conversationLots of retailers have boring conversationsIn a connected world, people don't have to settle for boring conversationsAnd they are beginning to look elsewherevsWhich conversation wouldyou rather have?Focus, focus, FOCUS!Niche markets are very large on a global basisWith the internet, the world is not aggregated geographically, it is aggregated based on values, aspirations and interestsSpecific conversations win over broad, boring conversationsThe broad, geographic-based retailers will suffer "death from a thousand paper cuts" by focused brands and niche retailers who can satisfy customer needs more specificallyMarket NichesBy definition, they are groupings of people with something in commonOn the internet, these are common values, interests and aspirationsIn the physical world, you are limited by geogrpaphy. On the internet you are limited only by connectivityNiches are definable: if you can't describe them, they don't exist!The Evolution of RetailWhy Geographic Aggregation of CustomersWill Fail and How the Industry Will BeChanged by the InternetLawrence Lenihan@lawrencelenihanwww.lawrencelenihan.comThe End!Lawrence Lenihan@lawrencelenihanwww.lawrencelenihan.com